Using Reasonable Assurance to Reduce Unemployment Claims Costs

Q: How do letters of reasonable assurance reduce unemployment compensation costs?

A: Issuing a Letter of Reasonable Assurance (LRA) to noncontract employees, including substitutes, is a loss-control practice for school districts to protect against employees filing unemployment claims over scheduled breaks (summer vacation, winter break, Thanksgiving, spring break, etc.). This practice helps districts reduce annual budget for compensation costs and saves administration time in processing and paying unnecessary unemployment claims.

Unemployment Eligibility

All district employees and substitutes are eligible to file for unemployment benefits with the Texas Workforce Commission (TWC) upon separation from employment and may be able to file for benefits during a scheduled break.

The TWC treats employees filing unemployment claims on breaks as laid off since this is a temporary work stoppage, although the employee has not been fired or quit. However, employees can’t receive unemployment benefits chargeable to the district if it can prove an LRA was issued to the employee. The LRA is the evidence notifying the employee is reasonably expected to return to work after the scheduled break.

The LRA is not a guarantee of future employment or a contract; it is a statement that there is a reasonable expectation—at the present time—that a position will be available when school resumes for noncontract employees who work less than 12 months.

Standard Procedures

The LRA should be issued in early spring to all noncontract employees who work less than 12 months. This allows time for employees to sign and return the form before the school year ends. It’s also a good practice to issue an LRA to newly hired noncontract employees and anyone who may have an unpaid break. Making this part of the hiring process will make sure school districts complete, year-round protection from unemployment claims.

The LRA should be signed by the employee and returned to the district. Without a signed letter, unemployment benefits may be charged back to the district. The signed form should be kept on file and attached as documentation when responding to unemployment claims that fall during summer break or over holiday periods.

Closing

Districts responding to all unemployment claims in a timely manner and providing supporting documents, like an LRA, are more likely to have the claim denied.

Additional information and a sample LRA are available to HR Services members in the HR Library. Other information on unemployment claims can be found on the TASB Risk Management Fund Insights page.